How Budget 2024 makes REITs and INVITs better

The Union Budget 2024 has brought a wave of optimism to investors in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The key highlight is reducing the holding period for long-term capital gains (LTCG), which changes how investors view REITs and InvITs.

Reduced Holding Period for Long-Term Capital Gains

One of the most significant announcements in the 2024 budget is the reduction of the holding period for REITs and InvITs from 36 months to 12 months to qualify for long-term capital gains. This change will likely enhance the liquidity of these instruments, making them more appealing to investors.

Impact

The reduced holding period allows investors to benefit from the favourable long-term capital gains tax rate of 10% after just one year, aligning REITs and InvITs more closely with other equity investments.

This policy shift is expected to attract a broader investor base, including those who prefer shorter investment horizons but still wish to enjoy the benefits of long-term capital gains tax treatment.